On occasion we have come across clients who have or are thinking of buying a property together. Most of the time it is very straightforward but what happens if one of them is a Non Resident and the other a South African Resident? Well it’s not as complicated as you may think.
There are a few key points that a Non Resident needs to take note of if deciding to buy in conjunction with a South African Resident.
As with any Non Resident who brings funds into South Africa, it is vital that proof of the introduction of the funds be kept. These are called Deal Receipts and have to be requested from the relevant receiving bank.
Once the property is sold it is important to note that the Non Resident is only allowed to take out a half share of the sale value.
This means that even if the Non Resident introduced the full purchase price originally, he/she will only be able to take out a half share.
John (Non Resident) and Marie (South African Resident) buy a property of R1 million together.
John introduces the full amount of R1 million.
2 Years later they decide to sell the property for R1.2 million.
John is only able to take out R600 000, regardless of the fact that he introduced the full R1 million originally.
With regard to buying the property in the name of a business, it must be noted that the legal owner will be a South Afri- can business. Any funds introduced from abroad to purchase a property in the name of the business must be recorded at the Reserve Bank as loan funds to the company, even if the only owner/shareholder is a Non Resident.
For further information on this topic please don’t hesitate to contact us.